What to Do if Your Homeowner’s Insurance is Cancelled
By Diane Tait
Image courtesy Pixabay
Now that another couple of named storms have reared their ugly heads, it’s more important than ever that your home is covered by insurance. All it takes is one lightning strike or some windblown debris to turn a domicile into a mess. The last thing you want is to have your property sustain severe damage only to find out your homeowner’s policy was cancelled. What’s even worse is you only have a short amount of time to get your home covered before you face the consequences. Before your mortgage is called in by your bank for lack of insurance, let me give you a few tips on how to deal with such a situation.
1. Why would your policy get cancelled?
insurance company is a business like any other.
That means they only make money by having lots of people pay for their
services. No insurer wants to cancel a
policy. That being said, if the risk of
carrying a policy outweighs the financial gain, you may get notified that your insurance
is going to be cancelled or not renewed.
A few of the reasons an insurer may consider you a bad risk is due to several
causes. Number one is non-payment or a bad
credit rating. Number two is a policyholder
who files too many claims. A criminal
record can also cause your policy to get dropped. So too can adding items to your property that
are considered high risk, such as acquiring a pit bull. That’s the bad news. The good news is it may simply be a matter of
finding an insurance company that’s willing to overlook what some insurers will
not. That’s where an independent
insurance agent can help you find coverage if you get dropped.
What else can cause a policy to be
than non-payment or fraud, it’s unusual for an insurer to cancel a policy
before the term of coverage is completed.
But there are a few issues that can get you in Dutch with your insurer. If your home is vacant, this can cause your coverage
to be dropped. If an insurance company finds out you lied on the insurance
application, you can expect to get a letter stating that your policy is being
discontinued and that you have 20-days to find other coverage.
What’s the difference between a
cancellation and non-renewal? While
either declaration means your coverage is going to be discontinued, in the case
of non-renewal, the insurer is required to give policyholders 45-days notice. Since every insurance company has its own set
of underwriting guidelines, sometimes it’s simply a matter of finding an
insurer that has guidelines that don’t exclude your property.
Is the insurance company’s
declaration the final word? Not
necessarily. In fact, the first thing
you should do if you get a notice of non-renewal or cancellation is to call
your insurance company to find out if something can be worked out to keep your
coverage in place. If you missed a
payment, it’s possible the insurer will overlook this provided you pay up and put
your policy on autopay or pay every 6-months as opposed to monthly. If the reason for cancellation was due to a
vacant property, you may be able to get covered under a landlord policy. In short, before you take a cancellation notification
to heart, call to find out if there isn’t some way to work out the problem.
5. Is your insurance company discontinuing coverage due to geography? If you live in Florida or California, you may find out that your insurance company has decided to cease selling their products in your area. Since Florida is the hurricane capital of the country and California has major wildfires nearly every year, it should come as no surprise that some insurers have decided to stop providing coverage in high-risk locales. If this happens to you, contact your agent to find an insurance company that’s still willing to offer coverage in your area.
How can you make it easier to find
is one thing that everyone has control over.
Whether it means removing risks like a vicious dog or a trampoline from
your property to satisfy an insurer, there might be a way you can help make it
easier to find coverage if you’re willing to adjust your lifestyle. By providing concrete proof that you don’t
represent a high-risk, you’ll find that not only is it easier for an insurer to
say yes, but you could find the premiums you’re offered cost less as well.
Image courtesy Pixabay
How long can you expect to wait for a
definitive answer from your insurer? Since time is of the essence if an insurance
company threatens to drop your coverage, you need to take corrective action as
soon as possible. If you want to plead your
case, it can take days just to find the right person to review your situation. Should your reinstatement still be refused,
you can take it up with a manager.
However, this will take even more time.
The bottom line is if it looks as though there’s a chance you may still
be denied coverage, the prudent thing to do is to have your insurance agent
line up another insurance company before the clock runs out and you’re left
with no coverage at all.
Can you play the loyalty card? Depending on how long you’ve been with an
insurer, you can try playing the loyalty card.
Point out how long you’ve been a loyal customer and how much you’ve paid
in premiums over the years. This plea is
especially good if you have several insurance policies under the same
company. If you have your home, car, and
business insured under one roof, this brings more leverage to bear since you
can easily move these policies to another company if your homeowner’s insurance
Can a home inspection get your
homeowner’s policy dropped? Absolutely, if an
inspector cites several deficiencies. However,
it my simply be a matter of repairing such things as an aging roof, leaky pipes
or a fire hazard to get reinstated.
it time to pull the plug? Since
the best defense is a good offense, sometimes it’s better to find an insurance
company who welcomes your business rather than fighting to keep paying an
insurer who doesn’t want to do business with you. That’s another reason you should have your
agent review all your policies every year to make sure you get the best deal
for your money.
Diane Tait owns and operates A&B Insurance. To find out more about how you can save money on insurance, go to her site or fill out the form at right.